In 2009, The Max M. & Marjorie S. Fisher Foundation began exploring impact investing in order to deepen its community support and complement traditional grantmaking. By 2012, the Fisher Foundation had committed 3.6% of its assets to impact investing. These investments are supporting partners’ growth while opening a new giving path for the Foundation to lead alongside others advancing the impact investing field. Across its impact areas, the Foundation employs two types of impact investment tools—Program-Related Investments (PRIs) and Mission-Related Investments (MRIs). PRIs are investments made from the Foundation’s grant-making budget, while MRIs are made from the Foundation’s corpus. Investments are generally multi-year, patient capital loans or equity investments that help to build its partners’ financial sustainability while supporting crucial day-to-day work.
As for the rest of its investments — the Fisher Foundation is beginning a learning journey after executing its first values aligned asset investment scan.
The Fisher Foundation is following in the footsteps of a growing number of organizations looking to align more investments in companies and strategies that advance their missions. Foundations in the U.S. collectively have trillions in assets but often only use the legally required 5 percent through grantmaking. This move explores what is possible if foundations begin applying the rest of their assets to toward their impact areas.
Jennifer Oertel, CMF’s impact investing expert in residence, explains how asset investments differ from impact investing. “The Fisher Foundation began its impact investing journey by carving out a percentage of its investment portfolio for impact investing, both PRIs and MRIs. To date, PRIs – investments that, if structured properly under the tax code, ‘count’ as grants toward a foundation’s 5 percent distribution and do not count as net investment assets subject to tax despite the fact that the assets are expected to be returned, often with a small return on investment, represent the bulk of their initial investments” Oertel said. “Now, it is taking a much deeper look at its investment portfolio – the ‘other 95 percent’ – with the intent to more actively evaluate the types of businesses the foundation supports through its investment portfolio.”
Following the likes of Heron, McKnight, Nathan Cummings and many others, the list of foundations of all sizes beginning to move their endowment assets to align to their missions keeps expanding. As the universe of investable impact investing product grows and diversifies across asset classes, it is a natural progression for the asset allocation of a foundation’s endowment to reflect its core values. At a CMF Impact Investing Committee meeting earlier this year, the Fisher Foundation with help from one of their advisors, Avivar Capital, shared what various values aligned investing approaches can look like for a foundation, including a negative or exclusionary screening, which screens investments based on specific environmental, social and governance (ESG) criteria.
Through its own work, the Fisher Foundation has begun by directing its fund manager to execute a specific screen on its investments. “We screened a portion of the Foundation’s assets to start to get a sense of the potential negative impacts via how those funds are invested,” Meredith Freeman, Director of Alignment and Impact Investing at the Fisher Foundation said. “There are a variety of negative screens available for important social issues such as human trafficking, child and slave labor, predatory lending, tobacco, and weapons manufacturing. These types of screens are available but often need to be requested.”
Freeman said the scan is an important learning and knowledge gathering opportunity for the Fisher Foundation. “It is important to work with asset managers who are willing to use socially responsible investment products to meet your needs, and to be very direct about what you’d like to screen your investments for,” Freeman said. The Foundation has learned there are many options to consider in determining next steps with investments, particularly those that are not values-aligned. “Just because you do a screen doesn’t necessarily mean that you have to divest if you find something that doesn’t align,” Freeman said. “We have several options, including partnering with other investors to press for increased transparency and changes to corporate behavior.“
“Even though we are 10 years into our journey with impact investing, we are still only just getting started. We value learning, we value being on this journey, and we’re always looking to learn from and share with others,” she said.